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Enhancing Microfinance in Cambodia

Since 2024, an important collaboration has been taking place in Cambodia involving the National Bank of Cambodia (NBC), the United Nations (UN), and the Cambodia Microfinance Association (CMA). This partnership aims to address pressing issues in the microfinance sector, including over-indebtedness, land-related financial risks, and the necessity for consumer protection. This initiative has brought together more than a hundred stakeholders, including government entities, financial institutions, and civil society, to work towards improving lending practices and ensuring the microfinance sector's long-term viability.

Aiming for Sustainable Practices

The Cambodia Microfinance Association has taken a proactive stance in addressing the financial challenges faced by vulnerable populations. Dith Nita, the Chairwoman of the CMA, emphasized their commitment to collaborating with both national and international partners. Her focus is on ensuring that microfinance remains a beneficial tool for economic empowerment.

“We recognize the challenges borrowers face and are actively working to improve lending practices and strengthen consumer protections,” stated Nita. Her words resonate with the association’s aim to foster a more informed borrower base while protecting their rights.

Key Reforms in Lending Standards

As part of their ongoing efforts, the CMA has partnered with the NBC and UN to implement enhanced lending standards. One significant reform is prohibiting the use of Indigenous Communal Land Titles (ICLTs) as collateral. This measure aims to protect vulnerable communities from the risk of land loss, thereby ensuring their financial security. The association’s focus is on granting loans based on the borrower’s ability to repay rather than merely relying on collateral, moving towards a more responsible lending framework.

Expanding Consumer Protection Services

In another progressive step, the CMA is supporting the expansion of the Financial Consumer Centre under the Association of Banks in Cambodia (ABC). This center offers essential dispute resolution services and amplifies consumer protections for borrowers. Additionally, the CMA is actively promoting financial literacy, particularly aimed at women and rural communities through initiatives like the Safe Community Finance Project. These programs are designed to empower borrowers with the knowledge necessary to make wise financial decisions, which, in turn, aims to mitigate the risks of over-indebtedness.

“Together with our partners, we are working to build a financial sector that is inclusive and offers meaningful opportunities for Cambodia’s most vulnerable populations,” Dith Nita explained. The emphasis lies not only on protecting borrowers but also on equipping them with the necessary tools for financial success.

Alignment with Global Goals

These initiatives align closely with the United Nations Sustainable Development Goals (SDGs), particularly focusing on poverty alleviation, gender equality, and financial inclusion. The CMA’s ongoing efforts ensure that Cambodia’s microfinance sector continues to function as a critical engine for economic progress and equal opportunity.

Call to Action

As the initiative unfolds, the CMA is calling on all relevant stakeholders—including investors, policymakers, regulators, civil society, and financial institutions—to join in shaping Cambodia's microfinance landscape. The collective action of these groups is essential to safeguarding vulnerable populations and ensuring that microfinance remains an empowering force for all Cambodians.

About the Cambodia Microfinance Association (CMA)

The CMA is a professional organization dedicated to promoting responsible microfinance practices in Cambodia. Collaborating with various stakeholders, the association strives to protect borrower rights and ensure the sustainability of the microfinance sector for community benefit throughout the country.